Comcast 2013 Annual Report Download - page 99

Table of Contents
Comcast Corporation
As of December 31, 2013 and 2012, the majority of our fair value method investments were equity securities that we account for as
trading securities and were held as collateral related to our obligations under prepaid forward sale agreements.
Prepaid Forward Sale Agreements
During 2013, we purchased a total of $657 million of equity securities classified as trading securities and held them as collateral
under our prepaid forward sale agreements. We also settled obligations under certain of our prepaid forward sale agreements
totaling $1.6 billion with a combination of cash on hand and $1.4 billion of equity securities. The majority of our remaining
obligations related to these investments mature in 2014. At maturity, the counterparties are entitled to receive some or all of the
equity securities, or an equivalent amount of cash at our option, based on the market value of the equity securities at that time. As
of both December 31, 2013 and 2012, our prepaid forward sale obligations had an estimated fair value of $3.6 billion. The
estimated fair values are based on Level 2 inputs using pricing models whose inputs are derived primarily from or corroborated by
observable market data through correlation or other means for substantially the full term of the financial instrument.
The derivative component of the prepaid forward sale agreements are equity derivative financial instruments embedded in the
related contracts, which we use to manage our exposure to and benefits from price fluctuations in the common stock of the related
investments. For these derivative financial instruments, we separate the derivative component from the host contract and record the
change in its value each period to investment income (loss), net.
Liberty Media
In October 2013, Liberty Media Corporation (“Liberty Media”)
redeemed 6.3 million shares of Liberty Media Series A common stock
(“Liberty stock”)
that had been held by us as collateral as of December 31, 2012 under certain of our prepaid forward sale
agreements in exchange for all of the equity of a subsidiary of Liberty Media. The fair value of the Liberty stock at the date of the
close of the transaction was $937 million. The assets of the subsidiary of Liberty Media included cash of $417 million, Liberty
Media’s interests in one of NBCUniversal’
s contractual obligations and a wholly owned operating subsidiary, Leisure Arts, Inc.
Following the close of this transaction, we now consolidate the subsidiary transferred to us, and the liability associated with
NBCUniversal’s contractual obligation is eliminated in consolidation.
Clearwire LLC
In July 2013, in connection with Sprint Communications, Inc.’s (“Sprint”) acquisition of Clearwire Corporation (“Clearwire”),
Sprint
acquired our investment of 89 million Class A shares of Clearwire for $443 million. As a result, we recognized a pretax gain of $443
million in our consolidated statement of income, which represented the recognition of cumulative unrealized gains previously
recorded in accumulated other comprehensive income (loss).
December 31 (in millions)
2013
2012
Assets:
Fair value equity securities held as collateral
$
3,959
$
4,143
Liabilities:
Obligations under prepaid forward sale agreements
$
811
$
1,248
Derivative component of prepaid forward sale agreements
2,800
2,302
Total liabilities
$
3,611
$
3,550
Comcast 2013 Annual Report on Form 10-K
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